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Oil and gas exploration update - ‘active hydrocarbon system’ in onshore concession areas

frackingRigThe oil and gas threat is back in the news as environmental organsation, Palp, releases an update on the various legal challenges to the government’s plan to facilitate oil and gas exploration companies' paths to exploratory drilling and extraction.

Palp states that back in May 2016, at a time when there was no mention and no contracts granted for oil exploration off the Algarve coast, the Galp/ENI consortium contracted the services of a MedServ that set up in port of Sines to support offshore exploration.

At the time, there were no licences issued under the oil concession contracts.

When MedServ was hired, the company announced on May 26, 2016 that it had won a tender issued by ENI to provide logistical support for exploration.

Palp points out that all of this happened before any exploration licence was issued and before any public consultation. The inference being that Galp/ENI and MedServ knew that the government was going to issue an exploration licence, whatever objections the public consultation threw up.

On 31 May 2016 the public consultation was opened and the results ignored by the government which issued a licence for Galp/ENI to conduct an oil exploration survey in the deep offshore waters of the Alentejo basin.

This information was issued on January 11, 2017, with Palp learning of the licence through the media on January 27, 2017.

An injunction swiftly was lodged by Almargem, Scianena and Quercus, at the court in Loulé. This cited the Ministry of the Sea, ENI and Petrolgal, SA, seeking to suspend the licence and to order those involved to refrain from actions that, in the opinion of the applicants, would violate EU rules.

This injunction was accepted by the administrative and tax court in Loulé, and a procedure currently is under way to hear witnesses.

Another injunction submitted by mayors group, AMAL, continues to be considered and Odemira council’s independent court action, rejected by the Administrative Court of Beja on 8 August 2017, is being appealed.

To the onshore situation and an information bulletin for investors, from Australis which owns two vast onshore concession areas in the Pombal and Batalha areas of Portugal, released on Monday referring to “large Portuguese exploration assets, low cost onshore acreage with minimal work commitments.”

In its ‘Portugal Concessions Overview’ the company refers to “limited exploration activity but regular oil and gas shows and tests demonstrate an active hydrocarbon system” and “conventional gas prospectivity in the deeper pre-salt Silves formation, with potential for material hydrocarbon volumes.”

Australis is pleased with a gas pipeline infrastructure that has excess capacity and crosses both its concession areas, also with Portugal’s modern road system with easy access to exploration and development areas.

The company sees favourable gas markets as all oil and gas is currently imported into Portugal and the domestic market is undersupplied.

Finally, in its report to attract investors, Australis refers to “attractive commodity pricing above US$7/GJ in a superior fiscal regime with royalties set at 0-9%, plus 21% corporate tax and no government participation,” in its activities.

In fact, the State will be entitled to royalties only after the company has recovered all of its exploration and drilling costs.

There is no mention of 'fracking' in the Australis report and no hint that widespread public opposition to its exploration and extraction plans in Portugal may influence its ability to drill and extract from its ‘active hydrocarbon system.’

The government managed to put a lid on the oil and gas question in the run-up to the local elections on October 1st. Environmental association, ASMAA, challenged local political candidates to state their view on the topic, with most diving for cover.

The positive view expressed in the Australis document, designed to attract investors, may be based on its confidence that ‘a little local difficulty’ can be overcome with the help of a complicit government, or the company’s directors are shielding their readers from a rapid build-up of local opposition to its onshore exploration ambitions in Portugal.


Australis Report


For ASMAA's analysis of the above notification from Australis, click here

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+1 #3 Neil M 2017-11-09 08:05
The creation of new jobs through this industry may help to increase the population again in this area.
+1 #2 Peter Booker 2017-11-08 09:35
Here is an industry which wants to develop in the interior of Portugal, which is presently suffering a depopulation crisis. Should we welcome it in those areas which are becoming inland deserts?
+1 #1 Mildred 2017-11-07 19:33
Time and again us foreigners see clearly an alternate universe in Portugal. Given that any gas and oil extraction will need millions in EU subsidies - what should be a transparent and easily understood procedure is cloaked, a always, in secrecy.
Hopefully EC plans to take over budgets and later on the administration of these less evolved member states will rein in this nonsense. But how many years ahead and, by then, what will be left of Portugal's natural resources, environment and historical patrimony?

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